Goldman’s five strategies for 2013 and S&P 500 targets

Goldman Sachs rolled out its crystal ball on Thursday, laying out its stock market targets, investment ideas and top market themes for 2013.

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Among their big predictions, Goldman is targeting a 12-month target of 1,575 for the Standard & Poor’s 500 index
/quotes/zigman/3870025SPX , which they say implies a 12% potential return on stocks – corporate fundamentas will support continued profit-cycle expansion.

Revenues for the S&P are expected to rise by more than 4% in 2013 and 2014, with margins hovering around the current 8.8% to 9%, earnings climbing by more than 6% and the price/earning multiple getting a modest bump — from 13.2 times to 13.8 times by the end of 2013.

And that pesky “turbulent political environment that curtailed corporate risk-taking in 2012,” is, whew, going away, says Goldman. The fiscal cliff will be avoided, but taxes will go up and federal spending is coming down.

And the U.S. economy will gain strength as the new year progresses, says Goldman, growing 1.9% in 2013 and 2.9% in 2014.

Other targets from Goldman: S&P 500 at 1,450 in three months and 1,500 in six months.

They also lay out five growth-capturing strategies for the new year.

1) Stocks will outperform treasuries

2) Equities will beat credit returns, though not on a risk-adjusted basis

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